FIN 350 FIN350 Quiz 6 (Strayer)




FIN 350 Quiz 6

This quiz consist of 30 multiple choice questions. The first 15 questions cover the material in Chapter 11. The second 15 questions cover the material in Chapter 13.

  1. A stock’s average return is 10 percent. The average risk-free rate is 7 percent. The standard deviation of the stock’s return is 4 percent, and the stock’s beta is 1.5. What is the Treynor Index for the stock?
  2. The ____ index can be used to measure risk-adjusted performance of a stock while controlling for the stock’s beta.
  3. Technical analysis relies on the use of ____ to make investment decisions.
  4. The Sharpe Index measures the
  5. The limitations of the dividend discount model are most pronounced for a firm that
  6. The January effect refers to the ____ pressure on ____ stocks in January of every year.
  7. If the returns of two stocks are perfectly correlated, then
  8. Which of the following is not commonly used as the estimate of a stock’s volatility?
  9. Stock prices of U.S. firms primarily involved in exporting are likely to be ____ affected by a weak dollar and ____ affected by a strong dollar.
  10. The limitations of the dividend discount model are more pronounced when valuing stocks
  11. ____ is (are) not a firm-specific factor(s) that affect(s) stock prices.
  12. The price-earnings valuation method applies the ____ price-earnings ratio to ____ earnings per share in order to value the firm’s stock.
  13. The formula for a stock portfolio’s volatility does not contain the
  14. The ____ is not a measure of a stock’s risk.
  15. A stock’s beta can be measured from the estimate of the using regression analysis.
  16. A(n) ____ is a standardized agreement to deliver or receive a specified amount of a specified financial instrument at a specified price and date.
  17. According to the text, a futures contract on one financial instrument to protect a position in a different financial instrument is known as
  18. If a financial institution expects that the market value of its municipal bonds will decline because of economic conditions, it could hedge its position by ____ futures contracts on ____.
  19. According to the text, when a financial institution sells futures contracts on securities in order to hedge against a change in interest rates, this is referred to as
  20. Currency futures may be purchased to hedge ____ or to capitalize on the expected ____ of that currency against the dollar.
  21. ____ risk is the risk that the position being hedged by a futures contract is not affected in the same manner as the instrument underlying the futures contract.
  22. An unexpected ____ in the consumer price index tends to create expectations of ____ interest rates and places ____ pressure on Treasury bond futures prices.
  23. Assume that speculators had purchased a futures contract at the beginning of the year. If the price of a security represented by a futures contract ____ over the year, then these speculators would likely have purchased the futures contract for ____ than they can sell it for.
  24. Municipal Bond Index (MBI) futures
  25. Interest rate futures are not available on
  26. The initial margin of a futures contract is typically between ____ percent of a futures contract’s full value.
  27. Systemic risk reflects the risk that a particular event could
  28. The basis is the
  29. If speculators believe interest rates will ____, they would consider ____ a T-bill futures contract today.
  30. The profits of a financial institution with interest-rate sensitive liabilities and interest rate-insensitive assets are ____ with hedging than without hedging if interest rates decrease.